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Northbound MRF funds see outflows in May

On the flipside, investors have continued to pour money into southbound funds.

Northbound (Hong Kong-domiciled funds) distributed via the Hong Kong-China Mutual Recognition of Funds (MRF) scheme had net redemptions of RMB 258.8m ($36.6m) in May, according to the latest data from China’s State Administration of Foreign Exchange (Safe).

The outflows come after the funds gained momentum in April, attracting RMB 2.28bn during the month.

Northbound fund flows

Monthly net flows in RMB Total net inflows in RMB* since the scheme started
Jan-20 (407.1m) 15.78bn
Feb-20 1.03bn 16.8bn
Mar-20 (1.53bn) 15.3bn
Apr-20 2.28bn 17.6bn
May-20 (258.8m) 17.3bn
YTD net flows: RMB 1.11bn
2019 total net inflows: 7.16bn
Source: Safe. *Figure at the end of the month

Year-to-date, Northbound funds attracted RMB 1.11bn, according to data from Safe.

Since the MRF began in 2015, 23 northbound products from 12 firms have been approved by China’s regulator, according to records from the China Securities Regulatory Commission.

This year, CSRC approved six funds under the MRF scheme, which include products managed by Amundi, JP Morgan Asset Management, Pictet Asset Management and HSBC Global Asset Management.

Seven more funds are still awaiting regulatory approval, which includes products managed by China Asset Management, Fidelity, Taikang Asset Management Hong Kong, E Fund Management and Income Partners, CSRC records show.

Southbound funds

On the flipside, investors in Hong Kong have poured money into southbound funds (China-domiciled products sold in Hong Kong) for the third consecutive month. However, the momentum seems to be slowing down, as monthly inflows for May were just at RMB 530,000, which compares with the combined net inflows of nearly RMB 20m in March and April.

Year-to-date, net flows totalled RMB 62.43m.

Southbound fund flows

Monthly net flows in RMB Total net inflows in RMB* since the scheme started
Jan-20 63.69m 328.86m
Feb-20 (21.18m) 307.68m
Mar-20 16.51m 324.19m
Apr-20 2.88m 327.07m
May-20 530,000 327.60m
YTD net flows: 62.43m
2019 total net outflows: 168.43m
Source: Safe. *Figure at the end of the month

In total, Hong Kong’s Securities and Futures Commission has approved around 50 China-domiciled funds to be sold in Hong Kong via the MRF, but only two dozen funds have been made available to investors, SFC records show.

Since the MRF scheme began in 2015, southbound funds attracted RMB 327.6m from investors. Northbound funds, meanwhile, had seen more traction, attracting RMB 17.3bn since 2015.

Part of Mark Allen.